1. Identifying Market Segments & Targets

2. Why Segment Markets?
Businesses want to respond better to the wants and needs of groups of potential buyers
This increases sales and in turn, profits
One size does not fit all

3. Why Segment Markets? What It Means To Segment
Prospective buyers are placed into groups
Groups with common needs
Those that will act the same when exposed to a marketing action
Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process

4. Why Segment Markets? What It Means To Segment
Because there are different segments, companies use the strategy of product differentiation
Firm uses different marketing mix activities to get consumers to think their product is better than the competition
Can be physical or nonphysical features

5. Why Segment Markets? When To Segment Markets
When a company thinks that segmenting customers will increase sales, profits, and return on invest, it should segment

6. Why Segment Markets? When To Segment Markets
Uses of Market Segments
One product, multiple market segments
Multiple products, multiple market segments
Mass customization

7. One Product, Multiple Market Segments
The company has 1 product/service and sells it to two or more segments
Avoids extra costs in development, research, engineering, manufacturing
Extra costs in promotion, distribution (expensive, but not as expensive as creating a different product)

8. One Product, Multiple Market Segments
Movies
Same movie, different ads for different segments
Divine Secrets of the Ya-Ya Sisterhood

9. From Glamour magazine

10. From Maxim magazine

11. Multiple Products, Multiple Market Segments
Athletic Shoes New Balance Website
Expensive to have so many styles, but better serves customers
High-End/Low-End
Banana Republic/Old Navy
Timberland Website

12. Mass Customization
Every person is unique, so tailor product to fit each person Nike Website
Timberland Website

13. Steps To Segment and Targeting Markets
Step #1: Group Potential Buyers into Segments
Step #2: Group Products to be Sold into Categories
Step #3: Develop a Market-product Grid and Estimate Size of Market
Step #4: Select Target Market
Step #5: Take Marketing Actions to Reach Target Market

14. Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Segmenting Basics
Potential for increased profits
If you can’t increase profits by segmenting, then don’t segment
Similarity of needs of potential buyers within a segment
Potential buyers need to be similar in terms of wants/needs
Use same advertising media

15. Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Segmenting Basics
Difference of needs and buyers among segments
By segmenting customers, costs of marketing increases; if costs are more than potential sales, create less segments
Potential of a marketing action to reach a segment
If you can’t develop a marketing plan to reach a segment, don’t segment

16. Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Segmenting Basics
Simplicity and cost of assigning potential buyers to segments
Managers have to see potential buyers characteristics and assign them to a segment

17. Ways to Segment Consumer Markets Customer Characteristics
Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Ways to Segment Consumer Markets
Customer Characteristics
Geographic Characteristics (Region)
Campbell’s nacho cheese
Too hot for eastern US, not hot enough for western and southwestern US
Cheerwine – “It’s A Carolina Thing”
Sun-Drop

18. Ways to Segment Consumer Markets Customer Characteristics
Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Ways to Segment Consumer Markets
Customer Characteristics
Demographic Characteristics
Includes age, sex, family size, education, income, social class
BMW
Virginia Slims
Pillsbury biscuits or family size packages

19. Ways to Segment Consumer Markets Customer Characteristics
Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Ways to Segment Consumer Markets
Customer Characteristics
Psychographic Characteristics (Lifestyle)
Assumes that if you live a certain way, so do your neighbors
Colorado, Montana more ranches, large trucks/trailers

20. Ways to Segment Consumer Markets
Steps To Segment and Targeting Markets Step #1: Group Buyers into Segments
Ways to Segment Consumer Markets
Buying Situations
Benefits Sought (Product Features)
What’s important to customers
Develop products and ads to focus on this
Usage/Patronage
Usage rate is the quantity consumed or visits to a store in a certain time frame
Frequent fliers
Usage rate sometimes called 80/20

21. Steps To Segment and Targeting Markets Step #2: Group Products Into Categories
Make sure the right product is marketed to right segment
Sears
Craftsman catalogs
J.C. Penney
Home, clothing, baby catalogs

22. Steps To Segment and Targeting Markets Step #3: Develop Market-Product Grid
Relates market segments of potential buyers to products offered or potential marketing actions by company
Potential market segments are the rows
Potential product lines are the columns
Each cell can show estimated market size of product sold to that specific segment

23. Steps To Segment and Targeting Markets Step #3: Develop Market-Product Grid

24. Steps To Segment and Targeting Markets Step #4: Select Target Markets
Target market segments can’t be too narrow, won’t have high sales potential
Target market segments can’t be too broad, spend too much on marketing efforts

25. Steps To Segment and Targeting Markets Step #4: Select Target Markets
How do you select target market segments?
Market Size
Estimate size by using marketing research
Estimated Growth
How much growth could occur?
Competitive Position
A lot of current competition? Future?

26. Steps To Segment and Targeting Markets Step #4: Select Target Markets
How do you select target market segments?
Cost of Reaching Segments
Don’t spend tons of money trying to reach a segment that you’ll never reach
Compatibility with Organization’s Objectives and Resources

27. Steps To Segment and Targeting Markets Step #5: Take Marketing Action
Develop a marketing plan
Evaluate marketing activities
Drop or design new activities based on evaluations

28. Steps To Segment and Targeting Markets Step #5: Take Marketing Action
Positioning the Product
Product Positioning
The place an offering occupies in customers minds on important attributes relative to competitive products
Product Repositioning
Changing the place an offering occupies in customers minds on important attributes relative to competitive products

29. Product Positioning Approaches to Product Positioning
Head to Head Positioning
Directly placing your product with similar products of competitors
Ex: Coca-Cola vs. Pepsi
Differentiation Positioning
Seeking a less competitive, smaller market niche in which to place a brand
Don’t want to compete with your own products
Ex: Applebee’s Carside To Go

30. Product Positioning Based on perceptions of customers
Need to know the following about customers:
Identification of important attributes for a product
Judgments of these attributes from existing brands
Ratings of an ideal brand’s attributes

31. Product Positioning A perceptual map can be created from these data
Means of displaying or graphing in two dimensions the location of products or brands in the minds of customers to see how your product stacks up to other brands

32. Product Positioning – Perceptual Map